MARGARET WALLS: “Fracking” is shorthand for “hydraulic fracturing,” the process of injecting large volumes of water, sand and chemicals into rocks far below the earth’s surface to release oil and natural gas that reside in “tight” and shale formations. Read More »

Are current gasoline taxes–both state and federal–the best way to pay for needed transportation expansion and improvements? If not, what should replace them?

Federal and state gas taxes in their current form—excise taxes per gallon of fuel sold at the retail level—may have outlived their usefulness as a transportation funding source. There are two fundamental problems. First, they have not kept up with inflation. Second, as vehicle fuel efficiency has increased, tax revenues have declined; this problem will worsen in the future with ramp-ups in corporate average fuel economy (CAFE) standards.

At 18.4 cents per gallon, the federal tax has been unchanged since 1993. Allowing for 20 years of inflation, it is equivalent to roughly 11 cents today. An ad valorem tax—a percentage of gasoline sales—would be one way to solve this problem. A few states have added ad valorem taxes to their excise tax and/or applied their general state sales tax to gasoline. Another option is to index the tax to inflation; Florida does that and with legislation just passed in Maryland, that state will do so too. Read More »